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Click here for complete GenRe/AIG trial coverage.
HARTFORD, Conn.Former General Re Corp. executive Christopher P. Garand on Wednesday was sentenced to one year and one day in prison for his role in engineering a bogus finite reinsurance transaction between Gen Re and American International Group Inc. The sentence was handed down by Judge Christopher Droney of the U.S. District Court in Hartford, Conn.
Judge Droney again rejected federal sentencing guidelines, calling them "too severe" in sentencing Mr. Garand, who is the third of five former Gen Re and AIG officials to be sentenced since they were convicted in February 2008.
Mr. Garand, 61, was Gen Re's senior vp in charge of U.S. finite underwriting from 1994 until August 2005. He was also sentenced to two years' supervised release and was fined $150,000.
Judge Droney said that although Mr. Garand played an important role in the sham transaction, he was "not a central figure." However, Judge Droney said Mr. Garand knew the scheme was illegal and fell short of discharging his responsibility to investors. Judge Droney said Mr. Garand's participation in the loss portfolio transaction, was "particularly tragic, given his personal history and character."
Prosecutors had asked for significant jail time, and asked the court to reject the defendant's pleas for leniency.
Before the sentence was read, Assistant U.S. Attorney Raymond Patricco said although the defense is trying to minimize Mr. Garand's culpability, "evidence at trial showed that Mr. Garand was much more than a sideline player." He asked the judge to impose a sentence that would deter others.
Mr. Garand's attorney, Robert J. Cleary of Proskauer Rose L.L.P. in New York, asked the judge for leniency citing Mr. Garand's limited role, personal history and commitment to community service.
Mr. Garand asked the judge for "mercy and compassion" before sentencing, saying his family has already suffered great pain. "As for AIG's loss portfolio, I am deeply distressed at having had any role in the entire episode," he said.
Mr. Garand was ordered to report to prison on April 22. Mr. Cleary will ask the court to allow him to remain free on bond pending appeal.
Mr. Garand and the other defendants in the case were convicted on charges of conspiracy, securities fraud and making false statements to the Securities and Exchange Commission. Prosecutors convinced the jury that the individuals had created a sham loss-portfolio transfer designed to help AIG manipulate its financial statements.
Judge Droney in November 2008 determined that AIG shareholders lost more than $500 million because of the bogus deala figure that, under recommended sentencing guidelines, could have resulted in life sentences.
Last December, Judge Droney sentenced former Gen Re Chief Executive Officer Ronald E. Ferguson to two years in prison and imposed a $200,000 fine. In January, Christian M. Milton, a former AIG vp of reinsurance, received a four-year sentence and a $200,000 fine.
Also convicted in the case were Elizabeth Monrad, Gen Re's former chief financial officer, and Robert Graham, former Gen Re senior vp and legal counsel.
Ms. Monrad is scheduled to be sentenced on April 2, and Mr. Graham's sentencing is set for April 30.
Mr. Milton, who also is appealing his conviction, was ordered to report to federal prison March 25.